My wife’s a teacher, so I’m a potential beneficiary of TRS, and as such, the decision to buy a stake in Connecticut-based Bridgewater Associates concerns me. Turns out I’m not alone.

“Why are they acting like they’re this glamor Wall Street firm when they should be acting on behalf of teachers?” Dallas investor Shad Rowe responded when I asked him about the deal. Rowe, the former chairman of the Texas Pension Review Board, has been a critic of pensions flooding into high-risk investments. “It’s absolutely mind-boggling.”

Even more troubling that the TRS deal itself was how the pension decided on Bridgewater. According to the Chronicle story:

Britt Harris, TRS’ chief investment officer, formerly served as Bridgewater’s CEO before joining the pension plan. He participated in the initial discussions of the investment when it was first offered to TRS, it said in its fact sheet. But Harris recused himself in early December.

Harris has had no personal financial interest in Bridgewater for more than five years, TRS said. He spent less than a year at Bridgewater, it added.

So we have a former private equity guy now running the state’s biggest pension fund and using teachers’ retirement money to buy into his old firm. This isn’t a “unique opportunity,” as one TRS board member described it. It’s a recipe for disaster. It’s risk fed by cronyism. Hedge funds, by their nature, are risky investments, designed for the savviest investors. It’s not a risk profile that’s appropriate for a retirement fund.

If Bridgewater’s assets, and returns, continue to soar, the pension could do quite well. But if it has a string of bad years and investors withdraw their money, inflows could suffer.

“The investor has huge market risk,” said George J. Mazin, a partner at Dechert, a global law firm. “There have been a number of deals where investors bought high at the top of the market and in the next couple of years there was no growth and an attrition in assets.”

But the ends don’t justify the means. Even if Bridgewater proves a shrewd investment, it isn’t the sort of risk that TRS should be taking with teachers’ money.